Falling hotel occupancy pinches resort-tax collections in March

Orange County resort-tax collections fell slightly in March compared with last year, the county reported Tuesday.

The county collected $14 million, a decline of 2.1 percent, or $300,000, from March 2005. Tourism leaders suggested the decline could be related to the timing of Easter, which fell in March last year and April this year.

Nevertheless, there's a growing concern in the industry over a long-term decline in occupancy rates.

"I would say the industry is moving toward a state of crisis," said Abe Pizam, dean of the Rosen College of Hospitality Management at the University of Central Florida. Smith Travel Research reported that Orlando hotel-room occupancy fell 7.8 percent to 80.1 percent in March from 2005

Hotel occupancy rates were lower each month from August 2005 to March. Richard Maladecki, president of the Central Florida Hotel & Lodging Association, said that an increase in room rates has prevented resort tax revenues from falling significantly.

"Although actual collections are significant, it's important to remember that it is being maintained by hotel room rates, and not occupancy levels," Maladecki said.

The average room rate in March was almost $110, up about 6 percent from the year before, according to Smith Travel.

The relationship between rising hotel rates and declining occupancy is an issue in an ongoing debate over whether Orange County should add a penny to the 5 percent resort tax to pay for several major public works projects. Hoteliers say any increase in the tax, levied on hotel rooms and other short-term rentals, ought to be spent on promoting their industry.

Alan Villaverde, general manager of the Peabody Orlando hotel, said if the decrease in occupancy rates continues, the lodging sector could face a deepening problem.

"If it's a slow downward trend, it's a big issue for the hotel industry," Villaverde said. "At a time when the business should be getting better, it's getting worse. We are now well out of the aftereffects of the Gulf War and we aren't in the midst of a recession. There is really no major reason for occupancy to be declining."

For the first six months of the fiscal year, the county's resort-tax collections total more than $65.7 million, up 3.5 percent from the same period a year earlier.

Danielle Courtenay, spokeswoman for the Orlando/Orange County Convention & Visitors Bureau, said the next several months should offer a clearer picture of the industry's health.

"The peak months of June and July should give us a better idea of where we are going," Courtenay said "If we are up a certain percentage in April, we might be able to make an inference that what happened in March was due to Easter."

But Courtenay said the long-running decline in occupancy is troubling.

"We have not reversed the trend yet, and that is not a good thing," Courtenay said.